Civil aviation secretary R.N. Choubey. Photo: Ramesh Pathania/Mint
New Delhi: The government is working on a new turnaround plan to make debt-ridden flag carrier Air India Ltd competitive and will also let all airlines raise external commercial borrowing for working capital purposes, civil aviation secretary R.N. Choubey said in New Delhi on Thursday.
The new turnaround plan will involve capital infusion, induction of new aircraft and liberty for board of directors to decide on operational matters, a key constraint for Air India in competing with private players, which—it is said—place aircraft orders for new aircraft over a simple phone call.
The proposal to let airlines to raise external commercial borrowing for working capital purposes comes at a time private airlines are burdened by high fuel and interest costs eating into their margins.
According to Choubey, decisions on both the proposals will be taken in consultation with the finance ministry. “We would like to make sure that Air India as a state-owned enterprise remains competitive and its market share does not go down, which may require capacity induction… We will also ensure that sufficient delegation (of power) is given to the board of directors to decide on operational matters,” Choubey said.
The aviation industry has become intensely competitive making it difficult for airlines to raise flight ticket prices without losing market share. The sector’s competitiveness as well as penetration is set to go up in coming months with private players set for a record induction of planes over the next two years.